China to become world's biggest gold consumer: World Gold Council

Step aside India: China is set to become the world's top gold consumer, the World Gold Council (WGC) predicts – echoing the China Gold Association's similar announcement in June.

The Council revealed on Thursday that the country's demand for gold is expected to reach 1,000 tonnes this year, Reuters reports. This compares with India's average yearly imports of 963 tonnes.

Marcus Grubb, managing director for investment for the WGC says this number could be even higher.

"We're going to have a record year for Chinese gold demand," Grubb told Bloomberg in a video interview. "In a year when growth is slowing in the Chinese economy. It's quite interesting."

The People's Republic deregulated the gold market 10 years after India; Grubb believes the Asian giant has been playing "catch-up."

"They're going to buy more gold whatever happens to the economy," he said.

The major driver behind this figure is investment and jewellery demand, with the latter accounting for a larger share much like in India, Grubb told Reuters.

The Sprott Group – a leading alternative investment manager – recently reported that gold contracts for physical delivery on the Shanghai Gold Exchange reached 1,098 metric tonnes year-to-date by the end of June. This represents approximately 40% of estimated global gold production in 2013, the investment group calculated.

Meanwhile the Indian government's battle against gold imports may have had some success: the WGC anticipates imports will fall to 850 tonnes.

In an attempt to reduce the country's current accounts deficit, the Reserve Bank of India has imposed various restricting measures on gold imports – most recently creating a requirement that gold importers set aside 20% of the yellow metal for export purposes.

The Council also predicts that global central bank gold demand will fall from a 48-year high of 532 tonnes in 2012 to 400 tonnes this year.

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